Collins Company Uses 12,000 Units of a Part in Its

question 27

Multiple Choice

Collins Company uses 12,000 units of a part in its production process.The costs to make a part are: direct material,$15;direct labor,$27;variable overhead,$15;and applied fixed overhead,$32.Eichholtz has received a quote of $60 from a potential supplier for this part.If Collins buys the part,75 percent of the applied fixed overhead would continue.Collins Company would be better off by

• A)$30,000 to manufacture the part.
• B)$348,000 to buy the part.
• C)$60,000 to buy the part.
• D)$216,000 to manufacture the part.

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Definitions:

Small Glass Container

A compact vessel made of glass, typically used for storing medicines, samples, or chemicals in various settings.

Contents Sterilized

Process in which all forms of life, including microorganisms, are destroyed or removed from objects or materials.

Varicella

Also known as chickenpox is a highly contagious disease caused by the varicella-zoster virus.

Chicken Pox

A highly contagious viral infection causing an itchy rash and red spots or blisters (varicella).